Should You Offer Longer Tenancy Agreements? Pros and Cons

The standard tenancy agreement in England is typically twelve months, rolling to a periodic tenancy after the fixed term ends. It has been the default for so long that many landlords have never questioned it. But the market is shifting. More tenants — particularly families and professionals — are actively seeking longer tenancies of two or three years, and the government has signalled its support for greater tenancy security through the Renters' Reform agenda.

For Middlesbrough landlords, the question is practical: does offering a longer tenancy agreement serve your interests, or does it create risks that outweigh the benefits? The answer, as with most things in property, depends on your circumstances.

The Case for Longer Tenancies

Reduced Void Periods

The most immediate financial benefit of a longer tenancy is fewer void periods. Every time a tenant leaves, you face a gap — typically two to four weeks in Middlesbrough, sometimes longer — during which the property generates no income. You also face the costs of remarketing, referencing new tenants, and potentially redecorating.

A tenant on a two-year agreement who stays for the full term gives you two years of uninterrupted income. A tenant on a twelve-month agreement who leaves at the end creates those void costs twice in the same period. Over a ten-year holding period, the cumulative saving from fewer turnovers can amount to several thousand pounds.

Lower Turnover Costs

Beyond lost rent, tenant turnover has direct costs. There is the letting agent's tenant-find fee, the cost of professional cleaning between tenancies, minor repairs and refreshment work, new inventories, and the time involved in managing the changeover. For a typical Middlesbrough property, the all-in cost of a tenant change is £500 to £1,000.

Longer tenancies reduce the frequency of these costs. A property that changes tenants every twelve months incurs these costs ten times over a decade. A property with tenants staying an average of three years incurs them three or four times.

Tenant Quality and Stability

Tenants who want longer tenancies tend to be those who value stability. They are often families with children in local schools, professionals with established jobs in the area, or couples who see the property as a long-term home. These tenants typically take better care of the property, are more likely to report maintenance issues early, and are less likely to cause management problems.

In Middlesbrough, family tenants renting in areas like Acklam (TS5), Marton (TS7), and Linthorpe (TS5) are the demographic most likely to request longer tenancies. They want to settle their children in local schools and build a life in the community without the uncertainty of annual renewals.

Predictable Income

For landlords who rely on rental income — whether as part of a portfolio strategy or to cover mortgage payments — the predictability of a longer tenancy is valuable. Knowing that your property is occupied and generating income for two or three years provides a level of financial certainty that rolling monthly tenancies cannot match.

This predictability is also attractive if you are managing the property as a long-term pension or retirement plan. Consistent income with minimal management allows you to focus on other priorities.

The Case Against Longer Tenancies

Limited Flexibility

A longer tenancy locks both parties in. If you want to sell the property, move a family member in, or carry out major renovation work, you cannot simply wait for the fixed term to expire in a few months — you may need to wait years.

In Middlesbrough's current market, where regeneration and rising values may create opportunities to sell at a premium, being locked into a three-year tenancy could mean missing a window. Equally, if your personal circumstances change and you need the property back, a long fixed term limits your options.

Difficulty Removing Problem Tenants

If a tenant on a two-year fixed-term agreement turns out to be problematic — persistent late payments, antisocial behaviour, or property damage — your options during the fixed term are limited. You can pursue Section 8 possession if grounds are met, but this requires evidence, court proceedings, and time. You cannot use Section 21 to end the tenancy until the fixed term expires.

Thorough referencing significantly reduces this risk, but it does not eliminate it. A tenant who was exemplary for the first six months may become problematic after a life change — job loss, relationship breakdown, or health issues. A twelve-month agreement limits your exposure if this happens.

Rent Review Limitations

If you agree a two-year tenancy at a fixed rent, you are locked into that rent for the full term unless the agreement includes a rent review clause. In a rising market — and rents in Middlesbrough have been increasing — this could mean you are charging below market rate by the end of the tenancy.

Conversely, if the market softens, you are protected because the tenant is committed to the agreed rent. The risk is symmetric, but in practice, landlords tend to feel the downside of being locked into below-market rents more acutely than they appreciate the upside of guaranteed income in a softer market.

Including a Rent Review Clause

The practical solution is to include a rent review clause in any tenancy longer than twelve months. This clause specifies when and how the rent will be reviewed — typically annually — and sets out the mechanism for determining the new rent. Common approaches include linking increases to CPI inflation, specifying a fixed percentage increase, or agreeing that rent will be reviewed in line with local market rates.

A well-drafted rent review clause protects the landlord from being locked into below-market rents while giving the tenant certainty about the review process.

Break Clauses: The Best of Both Worlds?

Many landlords and tenants find a middle ground through break clauses. A two-year tenancy with a twelve-month break clause gives the tenant the security of a longer agreement while preserving the landlord's option to regain possession after the first year if needed.

For Middlesbrough properties, a common structure is a two-year fixed term with a mutual break clause at the twelve-month point, requiring two months' written notice from either party. This provides enough security for the tenant to settle in while giving the landlord a realistic exit option.

The break clause must be clearly drafted and correctly exercised to be valid. Using a professionally drafted tenancy agreement — rather than a free template downloaded from the internet — is essential.

What Types of Properties Suit Longer Tenancies?

Not every property benefits equally from longer tenancies. Family homes in established residential areas — three-bedroom semis in TS5 and TS7, for example — are natural candidates. The tenant profile in these areas already trends toward longer stays, and formalising that through a longer agreement benefits both parties.

Properties aimed at students, young professionals, or transient workers may be less suited to long fixed terms. These tenant groups tend to value flexibility and may resist committing beyond twelve months.

HMOs are generally unsuitable for long fixed terms because the multi-tenant dynamic means frequent changes regardless of the agreement structure.

The Legal Framework

Under current English tenancy law, there is no maximum length for an assured shorthold tenancy. You can offer two, three, five, or even ten-year agreements. However, tenancies of seven years or more must be registered with the Land Registry, which adds complexity and cost.

For most Middlesbrough landlords, two or three-year agreements with appropriate break clauses and rent review provisions offer the practical sweet spot — long enough to reduce turnover and provide stability, short enough to retain reasonable flexibility.

Our Recommendation

At Ascot Knight, we generally recommend that landlords consider longer tenancies for the right properties and the right tenants. A well-referenced family tenant requesting a two-year tenancy on a family home in a desirable area is a positive proposition in most cases.

We always include rent review clauses in tenancies longer than twelve months and can advise on appropriate break clause structures. If you are a Middlesbrough landlord considering a longer tenancy — or if a tenant has requested one and you are unsure — get in touch with our team. We will help you structure an agreement that protects your interests while giving your tenant the stability they are looking for.